U.S. President Barack Obama suggested in this week's speech on carbon emissions that approval for the Keystone pipeline from Canada would require there be no increase in problems from greenhouse gases, those gases blamed in some circles for global warming. Obama has previously delayed the approval or denial decision on the overall pipeline project but the time is coming when it can't be put off forever. Analysts are already saying whatever the decision, there will be some immediate reaction in the loonie and currency trading.
But that may be thinking very short term.
Canada has already invested too much in the Alberta tar sands not to sell the oil somewhere. The U.S. may say "no" but only because there may be enough wet shale oil domestically in 10 years not to worry about a pipeline. But equally, they may say "yes" to keep it from going elsewhere. China must be looking on with interest. A pipe can run west across the Rockies just as easily as it can run south. And running west requires the Canadians not to ask anyone's permission at all. Canada may prefer to sell their oil south for strategic reasons, but they will be pragmatic about their own sovereign and fiscal interests. Environmental concerns? At the end of the day, the geopolitics will win out. Fot the loonie, a decision on Keystone may not matter too much at all other than when the revenue in U.S. dollars is converted to Canadian dollars. And that will happen whoever buys Canadian oil.